Vietnam’s gig workers slammed by rising fuel costs amid fallout of Iran war | Business and Economy News
Ho Chi Minh City, Vietnam – After a long day of ferrying passengers to and fro recently, e-hailing driver Nguyen was dejected to find he had spent half of his earnings on fuel.
“I drove for around seven or eight hours, making around 240,000 Vietnamese dong [$9.11] and then I paid 120,000 Vietnamese dong [$4.56] on petrol,” Nguyen, a motorcyclist who connects with passengers via the locally developed super-app Be, told Al Jazeera, asking not to be identified by his real name.
Recommended Stories
list of 4 itemsend of list
“I can’t survive with this amount of money in the city.”
In Vietnam, the ripples of the US-Israel war on Iran are hitting many gig workers hard.
The Southeast Asian country normally sources about 80 percent of its crude oil from Kuwait, but shipments have dried up amid Iran’s effective blockade of the Strait of Hormuz, driving up fuel prices.
Diesel prices have more than doubled, while petrol prices have risen almost 30 percent, making getting from point A to point B an increasingly expensive proposition in cities such as Ho Chi Minh City, home to more than 7 million motorcycles.
“Because the petrol price is so high, so many drivers are turning off the app, going home and just not working,” Nguyen said.
“After today, I will turn off the app and stop working for a few days to see if the price goes down or if the government is helping in any way.”
Vietnam’s government has rolled out a series of emergency measures to cushion the blow for citizens.
Prime Minister Pham Minh Chinh last month announced that an environmental tax on diesel, petrol, and aviation fuel would be suspended until April 15 to help stabilise prices.
Nguyen Khac Giang, a Vietnamese-born visiting fellow at the ISEAS-Yusof Ishak Institute in Singapore, said authorities had been forced to act to stave off rising disgruntlement among citizens.
“There are a lot of complaints and frustrations about rising living costs, because gas prices are everything in Vietnam,” Giang told Al Jazeera.
“It’s not only necessary in terms of making the population feel relief about the rise of gas prices, but at the same time, it will keep the macroeconomic stability intact, given the turbulence outside Vietnam.”
Despite the government sacrificing an estimated $273m in revenue via the tax cut, signs of strain are mounting across the economy.
Public transportation is stretched to capacity in major cities, while domestic carriers such as Vietnam Airlines and Vietjet Air have slashed flights.
“As a very, very open economy, Vietnam is super vulnerable to international shocks,” Giang said.
Gig workers have been particularly exposed due to the double whammy of heavy fuel consumption and minimal labour protections.
“Their income is changeable due to factors beyond their control,” Do Hai Ha, a research fellow at the University of Melbourne who has studied Vietnam’s gig platforms, told Al Jazeera.
“They have no chance to negotiate with the platforms.”
Many drivers have had no choice but to work longer hours as they are “excluded from labour protection, so there’s no guarantee in terms of minimum wages or overtime pay”, Do said.
Companies, too, are feeling the crunch.
Anh Dao, who collects fares on Ho Chi Minh City’s bus route 13, said the bus operator has been losing money due to the surge in diesel prices, despite raising ticket prices by 3,000 Vietnamese dong ($0.11).
“As we already signed the contract, we cannot just stop running the buses,” Ahn told Al Jazeera.
For one fisherman in the coastal region of Binh Thuan, about 200km (124 miles) from Ho Chi Minh City, rising fuel costs have prompted a frantic search for cheaper options to power his basket boat.
“Now that fuel prices are rising, it’s having a big impact,” the fisherman told Al Jazeera, asking not to be identified by name. The middlemen he does business with have been citing weak demand to justify offering lower prices for his catch, he said.
“What I was usually able to sell for 800,000 Vietnamese dong [$30] is now only selling for 650,000 Vietnamese dong [$24],” he said.
Families kept apart
For some low-income families, the rising costs are reshaping daily life in other ways.
After a weeklong trip to the Mekong Delta region, Uyen Pham, a communications manager for the Saigon Children’s Charity, said she has seen the strain firsthand.
“Several parents noted that the cost of bottled cooking gas has nearly doubled,” Pham told Al Jazeera.
“Most of our beneficiary families have always relied on wood-fired stoves or a hybrid of wood and gas to save money. With the recent price hike, they are now strictly limiting their gas usage even further, relying almost entirely on wood to cut every possible expense.”
For many parents, the rising fuel costs have also meant less time with family.
“Many parents in remote areas must leave their children with grandparents to work in cities,” Pham said.
“Rising fuel prices directly increase their commuting costs, while manual labour wages remain stagnant. This pinches their take-home pay and, in some cases, reduces how often they can afford to travel home to see their children.”
For the government in Hanoi, the price volatility has intensified the focus on greater energy independence, Giang, the visiting fellow, said.
“The longer-term question this crisis has enacted is a very important question about the strategic autonomy of Vietnam in terms of energy dependencies, especially when we are a net importer of oil,” he said.
Policymakers will need to “more aggressively accelerate Vietnam’s energy independence by building more refineries,” Giang said, “because now we only have two refineries, which is not enough for the Vietnamese market.”
With long-term solutions likely to take years to come to fruition, authorities are scrambling for short-term fixes.
Late last month, Vietnam’s prime minister and a delegation from the Ministry of Industry and Trade visited on the Nghi Son Refinery and Petrochemical Complex, the country’s largest refinery, in Thanh Hoa, a coastal city about 1,500km (932 miles) north of Ho Chi Minh City.
During their visit, officials said the refinery, which supplies about 40 percent of Vietnam’s petrol needs, would urgently need to find alternative sources of crude, as current supplies were expected to run out by the end of May.
The war on Iran also appears to be reshaping at least some domestic investment.
Vingroup, Vietnam’s largest conglomerate, last month informed authorities that it wanted to halt plans to build the country’s largest liquefied gas-fired power plant and put the funds towards a renewable energy project instead, according to a letter reported by the Bloomberg and Reuters news agencies.
In the letter, the company cited “the significant risk of high fuel prices for LNG power projects” due to the war.
In the meantime, Duy, who works at a cafe tucked behind a Ho Chi Minh City petrol station, is feeling some relief after the government’s fuel tax cut, which authorities projected would reduce petrol prices by about one-quarter and diesel prices by about 5 percent.
“I usually pay 100,000 Vietnamese dong [$3.80] a week on gas, but at the peak of the high prices a few days ago, it was almost double that,” she told Al Jazeera.
“It affected my income.”
Additional reporting by Nguyen Hao Thanh Thao
